Ministry of Trade Communique on
Israel-Jordan Trade Agreement

October 25, 1995

On the eve of the signing of the
Israel-Jordan trade agreement, the spokesman of
the Ministry of Trade and Industry issued a
statement explaining the nature of the agreement,
its background and highlights. The agreement
dealt with customs and customs exemptions,
preferential treatment for certain products,
exchange of information and the removal of trade
barriers. Israel regretted the inability of
Jordan to join an Israel-Jordan Free Trade Zone.
The Jordanian Parliament had, prior to the
signing of the agreement, passed legislation
ending the economic boycott of Israel. Text of
the communique follows:

Tomorrow, 25.10.95, Industry and Trade Minister
Micha Harish and Jordanian Trade Minister Abu
al-Rajoub will sign a bilateral trade agreement
which will signal the opening of trade between
Israel and Jordan.

The agreement is the culmination of the trade
negotiations which the two countries have been
conducting for nearly a year, during which the
economic delegations of Israel and Jordan met
more than 10 times to work out an economic and
trade agreement. Their efforts have produced an
agreement which establishes a framework for
bilateral commercial ties.

The text of the agreement, which will be
signed at the Moriah Dead Sea Hotel, expresses
the two countries' desire to act jointly to
create commercial ties and economic cooperation
for their mutual benefit, in accordance with the
Israel-Jordan Peace Treaty.

In the agreement, the two countries undertake
to work towards removing trade barriers, economic
discrimination and the boycott of goods. In this
framework, the Jordanian parliament has already
passed a bill ending the economic boycott of
Israel.

The agreement also establishes procedures for
conducting inquiries, ways of increasing trade
and exchanging information. Economic ties will be
handled by a joint economic committee, which has
been established.

An additional protocol has established the
granting of preferential customs treatment to a
list of products agreed upon by the parties,
following a series of discussions on the subject.
This agreement on preferences is limited to a
period of three years, during which the sides
will discuss ways to deepen the customs
preferences and to find ways of increasing the
exchange of goods between the two markets.

This limited arrangement was achieved in the
light of the Jordanian delegation's difficulty on
explicitly committing itself, now, to a future
Israel-Jordan free trade zone. The goal is to
enable further negotiations to be held to
complete the process of opening markets, in light
of possible trade developments. The commitment to
a future free trade zone agreement is mentioned
in the agreement, consistent with the peace
treaty in this respect.

There is a three-level structure of
preferences which Israel will grant to Jordan: an
exemption from customs duty and preferences of
20% and 50% On the accepted base tariff vis-a-vis
imports from third countries to Israel. In
practice, Israel will grant the preferences to
most Jordanian industrial products, including
cement, furniture, foodstuffs, antennas,
pharmaceuticals, toys and other products. The
preferences that Jordan will grant to Israeli
imports are set at 15% of the current customs
rate followed in Jordan when the goods are
released and 5% of them will apply two years
after the start of the agreement.

The Israeli products which will enjoy import
preferences to Jordan include plywood, tires,
foodstuffs, pharmaceuticals, electronic
components, medical equipment, communications
equipment, locks and safes and other products.
Similarly, the two delegations also agreed on an
annex concerning rules-of-origin, which lists the
conditions for defining an "original
product" that may enjoy the agreed-upon
trade preferences.

The negotiations took into account the
economic gap between the abilities of the two
countries, while preserving the important
interests of local industries, giving preference
to exports to Jordan - especially for products
that do not compete with Jordanian industry, such
as tires, plywood, etc. This is, as mentioned
above, in exchange for preferences that have been
given to imports from Jordan.

Industry and Trade Minister Micha Harish
expressed his satisfaction at the successful
conclusion of the negotiations and expressed his
hope that the two sides will make every effort to
ensure a smooth implementation of the agreement
in order to fully realize the advantages that it
confers on both sides.

The Israeli and Jordanian Industry and Trade
Ministries have already received numerous
inquiries from both countries' business sectors
regarding commercial ties, which will become
possible following the signature of the
agreement.